The demise of the triple lock.

itwasntme001

Linton said:

itwasntme001 said:

Linton said:

itwasntme001 said:

Just to add on the above by way of an example; I know of many couples (including my parents) who have retired or close to retiring who have not worked in typical "professional" careers and who do not have any more qualifications than A-level and they all are very well off, all with a minimum net worth of £1m and that is not even counting any of their private pensions they may have.

Now you have so many young "professionals" with undergraduate degrees working in low wage occupations where it is very difficult to see any decent real wage growth in their careers and with no gold plated DB pension plans to look forward to.

itwasntme001 said:

bigadaj said:

itwasntme001 said:

Just to add on the above by way of an example; I know of many couples (including my parents) who have retired or close to retiring who have not worked in typical "professional" careers and who do not have any more qualifications than A-level and they all are very well off, all with a minimum net worth of £1m and that is not even counting any of their private pensions they may have.

Now you have so many young "professionals" with undergraduate degrees working in low wage occupations where it is very difficult to see any decent real wage growth in their careers and with no gold plated DB pension plans to look forward to.

Though the above is partly due to a supply and demand element behind the value of a degree. If you produce people with degrees that are actually of lower academic standard than those with a levels in previous generations its no surprise to find that many graduates have a lower earning potential. 

Well yes but the point remains the same - before you did not need a degree to get wealthy.  Now the average degree (+ the wasted student debt) is not enough.

When I went to university in the 1960s the number of 18 year olds who went into any higher education, never mind university, was about 7% of the total.  So a good degree was pretty much a guarantee of a good job offer, but very few people had one.

The majority of people left school at 15 (the standard school leaving age), never had the opportunity to take O levels, never mind A levels, and went into a manual or equivalent unskilled job. Even having one A level suggested you were of above average academic ability.

So comparing the situation now with 50-60 years ago is crazy, it was a totally different world.  Would you have preferred to have been around then?  How confident are you that you would have been one of the lucky few?

You are also missing the point completely.  The majority who left school at 15 ended up working in jobs that still paid well and where the wages rose above the inflation trend and benefited from lower house prices, lower interest rates causing asset price inflation over time, DB pension schemes, GARs, cheaper public sector pension plans.  Give it 20 years and I am pretty sure in hindsight the baby boomer generation would have been a better generation to be born into.

Do you really believe the majority of the population leaving school at 15 ended up working in well-paid jobs?  I wonder who did all those poorly paid jobs.

You are comparing your situation, which to the best of my knowledge is average, with that of a lucky elite.  You disparage your parents who "did not have any qualifications other than A levels" when those A levels would have meant more than a degree now in terms of education level compared to the rest of the population.  Plus you have not taken account of the rise n expectations.  People lived simpler and cheaper lives a few decades ago.

Many people did not have DB pension schemes - they perhaps did not have any pension scheme at all until late in their careers as pensions were often a management perk.  As late as 2008 less than 50% of employees were in an occupational pension scheme.  The average income from occupational pensions now is about £180/week for those who receive it.  So hardly a life of luxury.

Housing for the young was hardly a bed of roses. People often lived at home until they got married and then rented perhaps saving for a future house. Young singles buying their own home was extremely unusual. 

Until relatively recently most women would have found career progression extremely difficult, but I assume you are male.

Well paid was not what I had intended to use as a generalization.  Of course there were low paid jobs being done as there are now.  However you could have still gotten a decent paying job even without a degree or even A-levels.  That is a lot less likely now.  DB pensions and GARs were not available to everyone but they certainly did exist for a large section of the private sector working population.  Now they are pretty much non-existent.  Even if people got these lucrative pensions late in their careers, they still got them.  They are not coming back for the current working generation.  It is the current working generation that will be paying for the public sector DB schemes.  Perhaps they will also be paying for private sector annuity pensions if a provider is unable to continue to fund them.

Whilst there is a lot more choice and expectations set to buy the next gadget or luxury holiday and clearly there has been a rise in the living standards of many people due to this choice and relative cheapness, there are certain things that are obvious today which is costing more such as housing and healthcare and less obvious such as people's time, data and attention on various technology platforms as well as, what is looking more likely, a rise in inflation and taxes to continue to fund government unfunded liabilities.

You can not look at the £180 in isolation.  Together with the state pension that is nearly £20k a year which is enough to live a good life for a retiree.  Today's retiree is likely to have saved capital outside of pension schemes as well.  Together with a mortgage free house and today's retiree can live quite lavishly.  Tomorrow's retiree will have their state pension deferred till later, will have less than £180/week from their pensions because they will not have GARs or DB pension or are likely to see as much growth in asset prices as we have done so previously.

I agree housing for the young was never a bed of roses.  But at least 40 years ago you had rising real wages to look forward to to pay off, on a real terms basis, smaller mortgage.  As you mention, you also had fewer women working compared to today and so you could make the argument that it is now more likely to take two sources of income (as a married couple) to afford the same house compared to 40 years ago.

My Dad generated nearly all the savings he has accumulated and he barely passed O-Level and had to work early to support his siblings and parents so never got the chance to do A-levels.  I work in a high paying career so have quite a lot saved up compared to my peers.  However even I do not think I can "beat" my Dad in terms of savings simply because my Dad had the luck to be born in his generation, and thereby benefiting from generous pension plans, rising asset prices and high rates of real interest rates to go hand in hand in excellent asset price appreciation.

itwasntme001

MACKEM99 said:

Linton said:

itwasntme001 said:

Linton said:

itwasntme001 said:

Just to add on the above by way of an example; I know of many couples (including my parents) who have retired or close to retiring who have not worked in typical "professional" careers and who do not have any more qualifications than A-level and they all are very well off, all with a minimum net worth of £1m and that is not even counting any of their private pensions they may have.

Now you have so many young "professionals" with undergraduate degrees working in low wage occupations where it is very difficult to see any decent real wage growth in their careers and with no gold plated DB pension plans to look forward to.

itwasntme001 said:

bigadaj said:

itwasntme001 said:

Just to add on the above by way of an example; I know of many couples (including my parents) who have retired or close to retiring who have not worked in typical "professional" careers and who do not have any more qualifications than A-level and they all are very well off, all with a minimum net worth of £1m and that is not even counting any of their private pensions they may have.

Now you have so many young "professionals" with undergraduate degrees working in low wage occupations where it is very difficult to see any decent real wage growth in their careers and with no gold plated DB pension plans to look forward to.

Though the above is partly due to a supply and demand element behind the value of a degree. If you produce people with degrees that are actually of lower academic standard than those with a levels in previous generations its no surprise to find that many graduates have a lower earning potential. 

Well yes but the point remains the same - before you did not need a degree to get wealthy.  Now the average degree (+ the wasted student debt) is not enough.

When I went to university in the 1960s the number of 18 year olds who went into any higher education, never mind university, was about 7% of the total.  So a good degree was pretty much a guarantee of a good job offer, but very few people had one.

The majority of people left school at 15 (the standard school leaving age), never had the opportunity to take O levels, never mind A levels, and went into a manual or equivalent unskilled job. Even having one A level suggested you were of above average academic ability.

So comparing the situation now with 50-60 years ago is crazy, it was a totally different world.  Would you have preferred to have been around then?  How confident are you that you would have been one of the lucky few?

You are also missing the point completely.  The majority who left school at 15 ended up working in jobs that still paid well and where the wages rose above the inflation trend and benefited from lower house prices, lower interest rates causing asset price inflation over time, DB pension schemes, GARs, cheaper public sector pension plans.  Give it 20 years and I am pretty sure in hindsight the baby boomer generation would have been a better generation to be born into.

Do you really believe the majority of the population leaving school at 15 ended up working in well-paid jobs?  I wonder who did all those poorly paid jobs.

You are comparing your situation, which to the best of my knowledge is average, with that of a lucky elite.  You disparage your parents who "did not have any qualifications other than A levels" when those A levels would have meant more than a degree now in terms of education level compared to the rest of the population.  Plus you have not taken account of the rise n expectations.  People lived simpler and cheaper lives a few decades ago.

Many people did not have DB pension schemes - they perhaps did not have any pension scheme at all until late in their careers as pensions were often a management perk.  As late as 2008 less than 50% of employees were in an occupational pension scheme.  The average income from occupational pensions now is about £180/week for those who receive it.  So hardly a life of luxury.

Housing for the young was hardly a bed of roses. People often lived at home until they got married and then rented perhaps saving for a future house. Young singles buying their own home was extremely unusual. 

Until relatively recently most women would have found career progression extremely difficult, but I assume you are male.

They did not have the "bank of mum and dad" either.  They had to do it themselves.

Whilst this is true, I do not think it has a meaningful impact on average due to the inequality.  Most of the wealth of the average retiree is tied up in housing and pension schemes that is not easily or impossible (annuities/ db schemes/ state pension) to extract for capital.

pafpcg

I blame the parents!

How about this for a hypothesis?

The boomer generation (born 1945+) were raised by parents who experienced the Depression and the devastation caused by two major episodes of mechanised warfare and who vowed "our children must have it better".  Thus was born Butler's 1944 Education Act and Bevan's NHS in 1948, giving the youngsters universal health care and free education.  I have enormous admiration for the sacrifies my parents' generation suffered and what they achieved.

My proposition is that the boomer generation did not experience first-hand the problems of earlier generations and did not acquire the determination "our children must have it better".  Instead, the boomer generation bowed to mammon ("Greed is good"), it sold off the family silver (state-owned assets and North Sea tax revenues) to reduce the level of income tax and encouraged building society demutualisation so that they could take for themselves the profits from the investments of previous generations.  So is it any wonder that later generations are expected to fend for themselves:  if you want further education, you have to pay for it yourself;  if you want secure well-paid employment, you'll have to work hard and prove you're better than anyone else in your peer group;  if you want a secure retirement, then you'll have to forego the pleasures on offer and save (and save some more) for comfort in your dotage.

I say to the younger generation:  society has changed for good or ill.  But don't be jealous of previous generations - who under the age of sixty can remember the sound of a child with whooping cough?  People grumble of de-industrialisation and lack of opportunity for low-skilled employment but who nowadays would contemplate the risks of being a miner, a deep-sea fisherman or even an agricultural labourer?

One final thought - in fifty years time, what will the younger generations say about their own older generations, the Millennials of today?  Be careful what you wish for...

hugheskevi

Some social research on attitudes to triple lock published yesterday, at this link.

Based on a poll of 2,000 adults the key findings are:

1. Almost a third (30%) of UK adults say breaking the manifesto pledge would be ‘unacceptable’
2. There is a clear generational split over the policy, with people over 55 twice as likely to deem breaching the commitment unacceptable compared to those aged 18-34

Key findings regarding tax increases are:

1. Around a quarter (26%) say it would be unacceptable if the Conservatives broke their manifesto promise to not increase VAT or National Insurance rates
2.   Just under a quarter (23%) say breaking the manifesto pledge not to raise income tax rates would be unacceptable

Other key points noted in the article:

1. Based on Office for Budget Responsibility average earnings and inflation forecasts, the flat-rate state pension could rise by over 21% by 2022
2. By contrast, average earnings are expected to increase by 9.7% over the same period

itwasntme001

pafpcg said:

I blame the parents!

How about this for a hypothesis?

The boomer generation (born 1945+) were raised by parents who experienced the Depression and the devastation caused by two major episodes of mechanised warfare and who vowed "our children must have it better".  Thus was born Butler's 1944 Education Act and Bevan's NHS in 1948, giving the youngsters universal health care and free education.  I have enormous admiration for the sacrifies my parents' generation suffered and what they achieved.

My proposition is that the boomer generation did not experience first-hand the problems of earlier generations and did not acquire the determination "our children must have it better".  Instead, the boomer generation bowed to mammon ("Greed is good"), it sold off the family silver (state-owned assets and North Sea tax revenues) to reduce the level of income tax and encouraged building society demutualisation so that they could take for themselves the profits from the investments of previous generations.  So is it any wonder that later generations are expected to fend for themselves:  if you want further education, you have to pay for it yourself;  if you want secure well-paid employment, you'll have to work hard and prove you're better than anyone else in your peer group;  if you want a secure retirement, then you'll have to forego the pleasures on offer and save (and save some more) for comfort in your dotage.

I say to the younger generation:  society has changed for good or ill.  But don't be jealous of previous generations - who under the age of sixty can remember the sound of a child with whooping cough?  People grumble of de-industrialisation and lack of opportunity for low-skilled employment but who nowadays would contemplate the risks of being a miner, a deep-sea fisherman or even an agricultural labourer?

One final thought - in fifty years time, what will the younger generations say about their own older generations, the Millennials of today?  Be careful what you wish for...

Just in case this was directed at me, no I do not blame the baby-boomers.  People do what they need to do and take advantage of the situation that is presented to them.  The only place I would lay any blame to the potential problems I foresee would be government and the various regulators.  Democracy was never meant to be a perfect system unfortunately.  No one seems to realise there are no free lunches.

itwasntme001

hugheskevi said:

Some social research on attitudes to triple lock published yesterday, at this link.

Based on a poll of 2,000 adults the key findings are:

1. Almost a third (30%) of UK adults say breaking the manifesto pledge would be ‘unacceptable’
2. There is a clear generational split over the policy, with people over 55 twice as likely to deem breaching the commitment unacceptable compared to those aged 18-34

Key findings regarding tax increases are:

1. Around a quarter (26%) say it would be unacceptable if the Conservatives broke their manifesto promise to not increase VAT or National Insurance rates
2.   Just under a quarter (23%) say breaking the manifesto pledge not to raise income tax rates would be unacceptable

Other key points noted in the article:

1. Based on Office for Budget Responsibility average earnings and inflation forecasts, the flat-rate state pension could rise by over 21% by 2022
2. By contrast, average earnings are expected to increase by 9.7% over the same period

21% vs. 9.7%.  I call that 1-0 to the baby-boomers.  And another clear piece of evidence of the generational inequality.

Linton

pafpcg said:

I blame the parents!

How about this for a hypothesis?

The boomer generation (born 1945+) were raised by parents who experienced the Depression and the devastation caused by two major episodes of mechanised warfare and who vowed "our children must have it better".  Thus was born Butler's 1944 Education Act and Bevan's NHS in 1948, giving the youngsters universal health care and free education.  I have enormous admiration for the sacrifies my parents' generation suffered and what they achieved.

My proposition is that the boomer generation did not experience first-hand the problems of earlier generations and did not acquire the determination "our children must have it better".  Instead, the boomer generation bowed to mammon ("Greed is good"), it sold off the family silver (state-owned assets and North Sea tax revenues) to reduce the level of income tax and encouraged building society demutualisation so that they could take for themselves the profits from the investments of previous generations.  So is it any wonder that later generations are expected to fend for themselves:  if you want further education, you have to pay for it yourself;  if you want secure well-paid employment, you'll have to work hard and prove you're better than anyone else in your peer group;  if you want a secure retirement, then you'll have to forego the pleasures on offer and save (and save some more) for comfort in your dotage.

I say to the younger generation:  society has changed for good or ill.  But don't be jealous of previous generations - who under the age of sixty can remember the sound of a child with whooping cough?  People grumble of de-industrialisation and lack of opportunity for low-skilled employment but who nowadays would contemplate the risks of being a miner, a deep-sea fisherman or even an agricultural labourer?

One final thought - in fifty years time, what will the younger generations say about their own older generations, the Millennials of today?  Be careful what you wish for...

One slight problem with your theory - the first Boomer PM was Tony Blair.  North Sea Oil and the rest of the family silver including the building societies were sold off by Margaret Thatcher who was also responsible for the "Greed is Good" attitude  and "there is no such thing as society" policies.  Thatcher and much of her cabinet came from the generation who grew up just before or during the war.  

PS Sorry another bit...
The NHS and the 1944 education act weren't achieved by your parents generation, but rather by those who had known the suffering in the first world war.

However I agree with the general gist!

itwasntme001

Linton said:

pafpcg said:

I blame the parents!

How about this for a hypothesis?

The boomer generation (born 1945+) were raised by parents who experienced the Depression and the devastation caused by two major episodes of mechanised warfare and who vowed "our children must have it better".  Thus was born Butler's 1944 Education Act and Bevan's NHS in 1948, giving the youngsters universal health care and free education.  I have enormous admiration for the sacrifies my parents' generation suffered and what they achieved.

My proposition is that the boomer generation did not experience first-hand the problems of earlier generations and did not acquire the determination "our children must have it better".  Instead, the boomer generation bowed to mammon ("Greed is good"), it sold off the family silver (state-owned assets and North Sea tax revenues) to reduce the level of income tax and encouraged building society demutualisation so that they could take for themselves the profits from the investments of previous generations.  So is it any wonder that later generations are expected to fend for themselves:  if you want further education, you have to pay for it yourself;  if you want secure well-paid employment, you'll have to work hard and prove you're better than anyone else in your peer group;  if you want a secure retirement, then you'll have to forego the pleasures on offer and save (and save some more) for comfort in your dotage.

I say to the younger generation:  society has changed for good or ill.  But don't be jealous of previous generations - who under the age of sixty can remember the sound of a child with whooping cough?  People grumble of de-industrialisation and lack of opportunity for low-skilled employment but who nowadays would contemplate the risks of being a miner, a deep-sea fisherman or even an agricultural labourer?

One final thought - in fifty years time, what will the younger generations say about their own older generations, the Millennials of today?  Be careful what you wish for...

One slight problem with your theory - the first Boomer PM was Tony Blair.  North Sea Oil and the rest of the family silver including the building societies were sold off by Margaret Thatcher who was also responsible for the "Greed is Good" attitude  and "there is no such thing as society" policies.  Thatcher and much of her cabinet came from the generation who grew up just before or during the war.  

Governments do not usually have much foresight.  The globalisation, capitalism and "greed is good" trends of past decades have de-empathised the need for community spirit and moral conscience.  The rise in envy and greed has taken over and with that lower quality of lives mentally and therefore physically as well.

woolly_wombat

itwasntme001 said:

hugheskevi said:

Some social research on attitudes to triple lock published yesterday, at this link.

Based on a poll of 2,000 adults the key findings are:

1. Almost a third (30%) of UK adults say breaking the manifesto pledge would be ‘unacceptable’
2. There is a clear generational split over the policy, with people over 55 twice as likely to deem breaching the commitment unacceptable compared to those aged 18-34

Key findings regarding tax increases are:

1. Around a quarter (26%) say it would be unacceptable if the Conservatives broke their manifesto promise to not increase VAT or National Insurance rates
2.   Just under a quarter (23%) say breaking the manifesto pledge not to raise income tax rates would be unacceptable

Other key points noted in the article:

1. Based on Office for Budget Responsibility average earnings and inflation forecasts, the flat-rate state pension could rise by over 21% by 2022
2. By contrast, average earnings are expected to increase by 9.7% over the same period

21% vs. 9.7%.  I call that 1-0 to the baby-boomers.  And another clear piece of evidence of the generational inequality.

.
You are conveniently overlooking the 1980 Social Security Act, which removed the link between a person's average earnings and the increases in the State Pension.

The triple lock was a long overdue attempt to redress the balance.

itwasntme001

woolly_wombat said:

itwasntme001 said:

hugheskevi said:

Some social research on attitudes to triple lock published yesterday, at this link.

Based on a poll of 2,000 adults the key findings are:

1. Almost a third (30%) of UK adults say breaking the manifesto pledge would be ‘unacceptable’
2. There is a clear generational split over the policy, with people over 55 twice as likely to deem breaching the commitment unacceptable compared to those aged 18-34

Key findings regarding tax increases are:

1. Around a quarter (26%) say it would be unacceptable if the Conservatives broke their manifesto promise to not increase VAT or National Insurance rates
2.   Just under a quarter (23%) say breaking the manifesto pledge not to raise income tax rates would be unacceptable

Other key points noted in the article:

1. Based on Office for Budget Responsibility average earnings and inflation forecasts, the flat-rate state pension could rise by over 21% by 2022
2. By contrast, average earnings are expected to increase by 9.7% over the same period

21% vs. 9.7%.  I call that 1-0 to the baby-boomers.  And another clear piece of evidence of the generational inequality.

.
You are conveniently overlooking the 1980 Social Security Act, which removed the link between a person's average earnings and the increases in the State Pension.

The triple lock was a long overdue attempt to redress the balance.

And you have provided further evidence of the generousness of pensions for the current retirees (as triple lock was introduced in 2011), RELATIVE to the previous generation.  Question remains if it will be as valuable for the next generation of retirees, already it is not given state pension age is set to increase for younger people.

Thank you.